Why quality makes all the difference

Within Insights we provide you with a deeper understanding of our investment philosophy and thinking.

The fact that quality companies can, on average, generate an excess return over the overall market has been proven many times in the literature. Over the last 30 years, companies with good returns on capital and low debt ratios have significantly outperformed companies with poor financial ratios. This is true for small caps as well as for large caps.

What our equity funds have in common is that quality companies are our top priority. Why quality pays off in the long run, which criteria we apply and how our process differs from common index providers are discussed in more detail in our current "Insight".

In particular, we shed light on the following questions:

Why invest in quality stocks?

  • Distinct competitive advantages, solid balance sheets and structural growth drivers form the basis for sustainable growth with high returns on capital.

What does "quality" mean to us?

  • When defining "quality companies", we take a holistic approach that includes both qualitative and quantitative factors.

Are there "unprofitable companies" in our portfolios?

  • No, basically not, but it depends on the overall context. Negative earnings or free cash flow figures in the short term can create added value for us as shareholders in the long term and therefore justify an investment.

Read the full publication here


Matthias Born
Head of Investments and CIO Equities
Tim Gottschalk